Installing a Mobile POS in supermarkets can seriously reduce revenues and will prove to be a real juggling act between convenience and profitability.

 

Whole Foods Market has announced that it will install Square in different parts of its stores in order to allow customers to pay conveniently. Should this decision be followed by other stores? The answer depends on how this experience will turn out. All the other stores are anxious to see the results.

As much as it is convenient for customers to pay for that one item that they want and then take off, supermarkets with their super-thin margins make their money on product placement and making sure customers go through as many aisles as possible in order to grab that extra item before they leave the store.

Why Is Milk in the Back of All Supermarkets…

Many people run to the supermarket to grab milk. In fact, milk is one of those items that consumers are likely to purchase by itself. Did you notice that milk is actually at the back of every supermarket?

If supermarkets cared that much about the convenience of their customers, they would place a fridge with cartons of milk right at the door. They know this, but they don’t do it.

It is no chance that milk is at the back of supermarkets. It is done on purpose to get consumers to meander in the labyrinths of aisles and rows in order to be exposed to other items.

…  And Bins at the Entrance?

In fact, it is not by chance that when you walk into a supermarket or a big box store that there are always large bins in front of you. It is done on purpose to “break the run” of the customer. As customers walk into a store, they usually do it at the speed they were walking in the supermarket’s parking lot or in the mall.

Placing bins allows them to slow customers down. Bins or shopping carts or any other device put in front of customers in supermarkets is designed to slow you down and change your mental disposition from a state of walking to a state of shopping and browsing.

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Is Payment Convenience a Good Idea…

Allowing customers to pay for items wherever they are reduces the chance of them getting exposed to other products. It reduces the chance for another impulse purchase at the cashier which is another area loaded with products that are conducive for last minute purchases.

 … Or Is Loyalty the Better Idea?

The fact that Whole Foods Market is going to use Square’s wallet is pointing the strategy in a totally new direction: Loyalty.

The first and biggest lever of loyalty is recognition. Recognizing customers and calling them by name is what makes customers go back to a certain place. By encouraging customers to use Square’s wallet, anybody at Whole Foods Market can address a customer by their name because of the interaction between the mobile wallet and the mobile terminal.

Once that becomes an everyday practice and if Whole Foods takes advantage of it, then Whole Foods is really safe because many customers will go back just for the recognition and whatever Whole Foods may be jeopardizing in smaller basket tickets, they can make up for it in return business.

Conclusion

Theoretically, allowing for consumers’ convenience by placing mobile POS is a  dangerous proposition because it will reduce the value of basket. But following up with a loyalty plan can really turn the situation around in favor of Whole Foods. Only time will prove if Whole Foods’ idea is a stroke of genius or if it ends up costing them extra sales over time.